The Securities and Exchange Commission of Pakistan (SECP) has made some changes in the "independent auditor's report" to be submitted by the companies. The SECP Friday notified SRO 141 (I)/2020 to issue draft amendments in the Auditors (Reporting Obligations) Regulations, 2018. Under the said regulations, the companies are required to submit the auditor's report on consolidated financial statements.
The auditor of a holding company meeting criteria mentioned shall make out a report on the consolidated financial statements as required. The revised "independent auditor's report" revealed that the regulations require the company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions.
We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee, the report adds.
Under the revised report, the SECP has proposed to delete the following part of the "independent auditor's report": "We have not carried out procedures to assess and determine the Company's process for identification of related parties and that whether the related party transactions were undertaken at arm's length price or not". The SECP has also proposed amendments in the auditor's review report on the statements of compliance with corporate governance regulations. The auditor of a company shall make out review report, where applicable, to the members on the statement of compliance with corporate governance regulations on the formats as follows: In case of a listed company, the review report on statement of compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 shall be on the format as provided in Annexure-VI.
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